Question 1

A country will not trade unless

Accepted Answer

A) It has an absolute advantage. 
B) The terms of trade are superior to domestic opportunities. 
C) Its balance of trade is in a surplus position. 
D) The production possibilities increase. 
A) It has an absolute advantage. 
B) The terms of trade are superior to domestic opportunities. 
C) Its balance of trade is in a surplus position. 
D) The production possibilities increase.

Question 2

According to the text,which of the following does the United States export?

Accepted Answer

A) Cars and cigarettes but not corn. 
B) Lumber but not farm equipment. 
C) Cars,cigarettes,corn,farm equipment,and services. 
D) Cars,cigarettes,corn,and farm equipment,but not education. 
A) Cars and cigarettes but not corn. 
B) Lumber but not farm equipment. 
C) Cars,cigarettes,corn,farm equipment,and services. 
D) Cars,cigarettes,corn,and farm equipment,but not education.

Question 3

Describe the pressures that discourage trade.

Accepted Answer

One pressure occurs because trade hurts

Question 4

Table 35.1 $$\begin{array} { | l | c | c | } 
\hline { \text { Country } } & \text { Tons of Soybeans } & \text { Computer } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$$ Based on the information in Table 35.1,assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods.For trade to be mutually beneficial for both countries,the terms of trade will be such that 1 ton of soybeans will exchange for

Accepted Answer

A) More than 3 computers but less than 5. 
B) More than 1/5 of a computer but less than 1/3. 
C) Less than 3 computers. 
D) Zero computers. 
A) More than 3 computers but less than 5. 
B) More than 1/5 of a computer but less than 1/3. 
C) Less than 3 computers. 
D) Zero computers.

Question 5

Suppose China can produce either 600 telephones or 400 DVD players,and Japan can produce either 400 telephones or 200 DVD players.Implicitly,China has

Accepted Answer

A) A comparative but not necessarily an absolute advantage in DVD players. 
B) An absolute but not necessarily a comparative advantage in DVD players. 
C) Both an absolute and a comparative advantage in DVD players. 
D) Neither a comparative nor an absolute advantage in DVD players. 
A) A comparative but not necessarily an absolute advantage in DVD players. 
B) An absolute but not necessarily a comparative advantage in DVD players. 
C) Both an absolute and a comparative advantage in DVD players. 
D) Neither a comparative nor an absolute advantage in DVD players.

Question 6

Over a given period of time,if exports are greater than imports,the result is

Accepted Answer

A) A trade war. 
B) A trade deficit. 
C) An embargo. 
D) A trade surplus. 
A) A trade war. 
B) A trade deficit. 
C) An embargo. 
D) A trade surplus.

Question 7

Protectionism achieves which of the following goals?

Accepted Answer

A) Greater consumption possibilities through greater specialization. 
B) Protection of infant industries. 
C) Protection of comparative advantage. 
D) Protection of absolute advantage. 
A) Greater consumption possibilities through greater specialization. 
B) Protection of infant industries. 
C) Protection of comparative advantage. 
D) Protection of absolute advantage.

Question 8

In terms of the world as a whole,imports must equal exports because

Accepted Answer

A) The United Nations requires it. 
B) It is part of international law. 
C) Most countries,other than the United States,have a balanced trade situation. 
D) Every good exported by one country becomes an import for another country. 
A) The United Nations requires it. 
B) It is part of international law. 
C) Most countries,other than the United States,have a balanced trade situation. 
D) Every good exported by one country becomes an import for another country.

Question 9

In Figure 35.1,what is the opportunity cost of motorcycles in Japan?

Accepted Answer

A) 1/2 of a DVD player per motorcycle. 
B) 1 DVD player per motorcycle. 
C) 2 DVD players per motorcycle. 
D) 3 DVD players per motorcycle. 
A) 1/2 of a DVD player per motorcycle. 
B) 1 DVD player per motorcycle. 
C) 2 DVD players per motorcycle. 
D) 3 DVD players per motorcycle.

Question 10

Assume Belgium can produce 5 units of good X or 2 units of good Y.Germany can produce 4 units of good X or 3 units of good Y.What would be the terms of trade between Belgium and Germany for 1 unit of good Y?

Accepted Answer

A) Between 4 and 5 units of X. 
B) Between 4/3 and 5/2 units of X. 
C) Between 4/3 and 5 units of X. 
D) Between 5/2 and 4 units of X. 
A) Between 4 and 5 units of X. 
B) Between 4/3 and 5/2 units of X. 
C) Between 4/3 and 5 units of X. 
D) Between 5/2 and 4 units of X.

Question 11

The primary purpose of NAFTA is to

Accepted Answer

A) Encourage the development of the Mexican and Canadian economies at the expense of U.S.workers and consumers. 
B) Protect U.S.and Canadian workers from unfair competition from Mexico. 
C) Increase income in Mexico,Canada,and the United States by encouraging free trade. 
D) Ensure that there are no losers as the result of trade agreements between Mexico,Canada,and the United States. 
A) Encourage the development of the Mexican and Canadian economies at the expense of U.S.workers and consumers. 
B) Protect U.S.and Canadian workers from unfair competition from Mexico. 
C) Increase income in Mexico,Canada,and the United States by encouraging free trade. 
D) Ensure that there are no losers as the result of trade agreements between Mexico,Canada,and the United States.

Question 12

What is a multilateral trade pact? Discuss the first one that was formed and what its impact has been.

Accepted Answer

A multilateral trade pact is a group of

Question 13

What should happen to the equilibrium price and quantity in a market as a result of a tariff on imports?

Accepted Answer

A) Equilibrium price and quantity should both go up. 
B) Equilibrium price should go up,and equilibrium quantity should go down. 
C) Equilibrium price should go down,and equilibrium quantity should go up. 
D) Equilibrium price and quantity should both go down. 
A) Equilibrium price and quantity should both go up. 
B) Equilibrium price should go up,and equilibrium quantity should go down. 
C) Equilibrium price should go down,and equilibrium quantity should go up. 
D) Equilibrium price and quantity should both go down.

Question 14

A beggar-thy-neighbor policy is

Accepted Answer

A) The imposition of import barriers for the purpose of curbing inflation. 
B) The imposition of trade barriers to increase domestic employment. 
C) The imposition of trade barriers for the purpose of expanding exports. 
D) An attempt by a poor country to get more foreign aid and assistance. 
A) The imposition of import barriers for the purpose of curbing inflation. 
B) The imposition of trade barriers to increase domestic employment. 
C) The imposition of trade barriers for the purpose of expanding exports. 
D) An attempt by a poor country to get more foreign aid and assistance.

Question 15

If a country does not engage in trade with other countries,it is known as

Accepted Answer

A) An open economy. 
B) A trade deficit economy. 
C) A closed economy. 
D) A trade surplus economy. 
A) An open economy. 
B) A trade deficit economy. 
C) A closed economy. 
D) A trade surplus economy.

Question 16

Which of the following statements is true for the two countries illustrated in Figure 35.1?

Accepted Answer

A) Japan has an absolute advantage in motorcycles. 
B) The United States has a comparative advantage in DVD players. 
C) Japan has an absolute advantage in motorcycles,the United States in DVD players. 
D) The United States has a comparative advantage in motorcycles,Japan in DVD players. 
A) Japan has an absolute advantage in motorcycles. 
B) The United States has a comparative advantage in DVD players. 
C) Japan has an absolute advantage in motorcycles,the United States in DVD players. 
D) The United States has a comparative advantage in motorcycles,Japan in DVD players.

Question 17

If a country is completely self-reliant in producing goods for its own consumption needs,then

Accepted Answer

A) It consumes more than it can with trade. 
B) Its consumption possibilities equal its production possibilities. 
C) It promotes specialization. 
D) It achieves a higher standard of living by exporting. 
A) It consumes more than it can with trade. 
B) Its consumption possibilities equal its production possibilities. 
C) It promotes specialization. 
D) It achieves a higher standard of living by exporting.

Question 18

An embargo is a prohibition against trading particular goods.

Accepted Answer

A) True 
 B)False

Question 19

The infant industry argument can be justified because

Accepted Answer

A) A new industry may never develop in a protected,noncompetitive environment. 
B) The government may not be able politically to end protectionism even when protectionism is no longer justified. 
C) Government may choose to protect industries,which places heavy import burdens on the economy. 
D) A new industry may be difficult to start in the face of existing foreign competition. 
A) A new industry may never develop in a protected,noncompetitive environment. 
B) The government may not be able politically to end protectionism even when protectionism is no longer justified. 
C) Government may choose to protect industries,which places heavy import burdens on the economy. 
D) A new industry may be difficult to start in the face of existing foreign competition.

Question 20

When quotas are eliminated,losers include

Accepted Answer

A) There are no losers when free international trade is established. 
B) Domestic producers. 
C) Foreign producers. 
D) Domestic consumers. 
A) There are no losers when free international trade is established. 
B) Domestic producers. 
C) Foreign producers. 
D) Domestic consumers.

Exam 35: International Trade

A country will not trade unless

According to the text,which of the following does the United States export?

Describe the pressures that discourage trade.

Suppose China can produce either 600 telephones or 400 DVD players,and Japan can produce either 400 telephones or 200 DVD players.Implicitly,China has

Over a given period of time,if exports are greater than imports,the result is

Protectionism achieves which of the following goals?

In terms of the world as a whole,imports must equal exports because

In Figure 35.1,what is the opportunity cost of motorcycles in Japan?

Assume Belgium can produce 5 units of good X or 2 units of good Y.Germany can produce 4 units of good X or 3 units of good Y.What would be the terms of trade between Belgium and Germany for 1 unit of good Y?

The primary purpose of NAFTA is to

What is a multilateral trade pact? Discuss the first one that was formed and what its impact has been.

What should happen to the equilibrium price and quantity in a market as a result of a tariff on imports?

A beggar-thy-neighbor policy is

If a country does not engage in trade with other countries,it is known as

Which of the following statements is true for the two countries illustrated in Figure 35.1?

If a country is completely self-reliant in producing goods for its own consumption needs,then

An embargo is a prohibition against trading particular goods.

The infant industry argument can be justified because

When quotas are eliminated,losers include

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Finance

Global Poverty

Filters